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Strategic Change, Multi-Task Managers And Executive Compensation

Author

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  • Joachim Schwalbach

Abstract

There is consensus that executive compensation is strongly tied to firm size and much less so to financial performance. Observed strategic change in corporations can affect these results. Based on multi-task theoretical considerations, the evidence for German industrial firms shows that elasticities in pay decrease only for large firms as they change from growth to downsizing strategies. Furthermore, pay-for-performance elasticities are contrary to predictions of agency theory. Both results support the belief that compensation contracts in public corporations are imperfectly aligned with firm performance and managers’ tasks.

Suggested Citation

  • Joachim Schwalbach, 2001. "Strategic Change, Multi-Task Managers And Executive Compensation," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 53(2), pages 102-116, April.
    • Handle: RePEc:sbr:abstra:v:53:y:2001:i:2:p:102-116
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    Cited by:

    1. Ivana Marinovic Matovic, 2019. "Factors Affecting Executive Compensation," Proceedings of the 15th International RAIS Conference, November 6-7, 2019 002IM, Research Association for Interdisciplinary Studies.

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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